PSPRS Reform Effort Fails: Management -1, Pensioners – 0.

Skip to the end – “Kavanagh on Tuesday also proposed a bill to provide more legislative oversight of the Public Safety Personnel Retirement System. That bill failed on a 4-4 vote, with critics saying it wasn’t needed.”

A state House panel unanimously approved legislation Tuesday that would curtail pension “spiking” for newly hired public employees who are highly paid.

House Bill 2058 is the latest move to stop the artificial inflation of pensions. It comes as the Goldwater Institute, a conservative think tank, is engaged in a Maricopa County Superior Court lawsuit against Phoenix for allowing its police officers and firefighters to spike their pensions.

At the Capitol, the Insurance and Retirement Committee approved the legislation 7-0 on Tuesday. One member, Rep. Bob Robson, R-Chandler, voted “present.” The bill now moves to full House for debate.

Public pensions, in general, are calculated based on salaries during the final years of employment. Some public employees have increased — or spiked — their pensions by getting their employers to approve large compensation increases during those ending years, thereby increasing their annual retirement benefits.

The Arizona Republic has found that pension spiking cost Phoenix at least $12 million a year, and that a small number of its police officers and firefighters were retiring as millionaires because of spiking and generous payouts upon leaving public service.

HB 2058, sponsored by Rep. John Kavanagh, R-Fountain Hills, would base the retirement benefit on no more than $150,000 of a person’s compensation, even if that person earned more money. The cap would affect only those in the statewide retirement systems.

Kavanagh told the committee his bill influences only 1 percent or less of those in the Arizona State Retirement System and the Public Safety Personnel Retirement System, which also runs pension plans for elected officials and corrections officers. Phoenix’s police officers and firefighters are in PSPRS, but its municipal employees are in the city’s own retirement system.

Kavanagh said the bill was needed because a handful of employees were taking advantage of the system and causing community outrage. He added that it would save taxpayers hundreds of millions of dollars in pension costs over time.

Kavanagh said government entities would be allowed to provide a 401(k)-style plan for highly paid employees if they are concerned that a new limit on retirement benefits would hurt recruitment.

Meanwhile, the Goldwater Institute last week scored a victory in court when Superior Court Judge John Rea denied motions to dismiss its suit. The group claims Phoenix is breaking the law by allowing senior-level police officers and firefighters to spike their pensions by cashing in unused sick leave, vacation and other benefits.

The lawsuit has caused the city’s public pension board to examine the spiking issue, which will be discussed on Feb. 14.

Kavanagh on Tuesday also proposed a bill to provide more legislative oversight of the Public Safety Personnel Retirement System. That bill failed on a 4-4 vote, with critics saying it wasn’t needed.